"When millions of Australian wage earners are experiencing wage stagnation, it hurts everybody."

Senator Cormann talked up the coalition's job creation record, saying lower unemployment levels would lead to more competition in the labour market and promote wages growth.

Mr O'Connor said lifting the minimum wage would stimulate the economy, arguing the link between hard work and a fair reward was broken.

"This scare campaign that you can't lift wages because it has an adverse effect on the economy is unfair and it's not tenable if you look at the evidence," he told ABC radio.

Notably, Labor's submission says the commission panel reviewing the minimum wage is "constrained by the current legislative provisions".

"(The ALP) no longer has confidence that these provisions have the capacity to deliver the wages growth that the lowest paid workers, and our economy, require," the submission says.

This sends the strongest signal yet that the law could change if Labor wins the federal election due in May.

Pre-empting an attack by the coalition, Labor pointed to the UK as proof a higher minimum wage won't push more people into unemployment.

That runs contrary to what the Fair Work Commission said in its decision last year, when it found the large increase to the minimum wage - needed to lift all workers out of poverty - would come with a substantial risk of job losses or reduced hours.